The Wall Street Journal and the Equal Employment Opportunity Commission (EEOC) have jointly reported that the government, federal agencies and new lawsuits are making one thing very clear: companies need to seriously rethink how they manage their diversity, equity, and inclusion efforts. Employers need to pay close attention to new laws, especially when it comes to hiring tools and language. In recent months, both the EEOC and Department of Justice (DOJ) have taken a stronger position on what’s legal and what could lead to lawsuits. Meanwhile, AI hiring systems are also under fire, and even the words used in job postings are facing possible lawsuits.
Here’s a closer look at each area that’s making headlines and what it all means for employers.
DEI Must Follow the Law
In March 2025, the EEOC and DOJ released new guidance for employers to help stay in compliance with federal laws. both agencies strongly support workplace inclusion, they warned that some common DEI strategies could now create legal trouble if they treat employees or applicants differently based on identity. So, programs that give any kind of special treatment based on an employee or applicant’s race, gender, or any other protected traits could violate Title VII.
Mentorships, training sessions, or internships that are only open to certain groups can be considered discriminatory. For example, a mentorship program aimed only at women or a leadership-training-track available only to employees of color has seemed like progress, but under Title VII of the Civil Rights Act, those programs now can be seen as discriminatory if they deny access based on race, gender, or similar protected traits. The new guidance refocuses the importance to making all opportunities available to everyone. They’re saying, it doesn’t mean DEI efforts have to stop, but it does mean employers must make sure their policies are inclusive by design, not exclusive in execution.
Focusing on fairness, access, and transparency will help companies continue to support diversity in ways that are still legal.
Race-Based Hiring
This spring, the EEOC also put out an internal memo warning that race-based hiring preferences could violate federal anti-discrimination laws. The message was simple: no matter how well-meant, giving preference to anyone based on race or gender, instead of qualifications, is illegal. Even if it’s part of a DEI effort, it still has to follow the law. It’s still legal to aim for a diverse applicant pool, but employers cannot legally favor a candidate based on race, gender, or ethnicity during final decision.
Employers are being encouraged to focus on job skills, experience, and a fair interview processes instead of identity-based targets. Including reviewing internal policies and training recruiters to avoid any appearance of bias during the hiring process. Companies that still want to increase representation can still do it by expanding their outreach and addressing barriers by:
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Anonymous resume reviews to prevent early-stage screening bias
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Structured interview questions that are consistent across all candidates
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Skills-based assessments that allow applicants to demonstrate qualifications directly
When it comes to the final hiring decision, the law is very clear now. Identity can not be a factor.
AI Hiring Tools
At the same time, the technology used in hiring is seeing legal challenges. A class-action lawsuit, Derek Mobley v. Workday Inc., accuses Workday of using AI tools that screen out older, Black, and disabled applicants unfairly. The case is still moving through the courts, but a federal judge has allowed the age discrimination claim to move forward as a class-action suit. It’s a big deal because it could set a legal precedent for how companies are really held accountable for the tools they use. Most employers rely on some kind of third-party platforms that probably use AI to scan resumes, rank candidates, or even do full video interviews. But if the tools they use are biased, even unintentionally, they cand violate the law.
And now, some legal experts are warning that companies could be held responsible if the tools and software they use turns out to be biased, even if it was unintentional. If a hiring platform turns out to be biased or unfair, the company using it can still be liable.
Companies should protect themselves:
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Audit AI tools regularly for patterns of discrimination
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Ask vendors for transparency on how their algorithms work
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Offer a human override to any automated decisions
Obviously employers won’t stop using new technology, but they have to use it responsibly. Hiring systems should improve fairness and efficiency.
Job Postings
Employers are also dealing with new legality over the language used in their job descriptions and benefits packages. Some companies include statements about their commitment to DEI, or highlight support programs for certain groups, but legal experts now caution that that language could actually backfire. Employers are now being advised to remove language that suggests hiring preferences or exclusions based on any form of identity.
Saying “we strongly prefer applicants from underrepresented backgrounds” or offering a “women-only leadership program” mighty exclude others and create legal risk. Courts have increasingly ruled that intent doesn’t always outweigh impact, when it comes to discrimination.
To avoid trouble, the experts recommend:
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Focusing on skills, experience, and responsibilities in job listings
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Using inclusive language like “all qualified applicants are encouraged to apply”
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Making sure ERGs (employee resource groups) and mentorships are open to anyone interested, not restricted by identity
If your company is large enough it may be a good idea to get legal counsel involved when reviewing public language related to hiring, benefits, and DEI policies. A few small edits could now be the difference between a positive impression and a potential lawsuit.
What This Means for Employers
Businesses are going to need to take a closer look at how they promote fairness in the workplace as pressure tightens from federal agencies, courts, and watchdog groups. As long as DEI stays around, it needs to be applied in specific ways that are legally sound and open to everyone. That includes updating training programs, testing AI systems for bias, and being extra mindful about verbiage and how job postings are written.
Companies that act now will be in a much better place to stay within compliance and keep their reputation as inclusive employers. DEI isn’t going away. But today, doing it right means re-focusing those efforts around equal access, open opportunity, and legal practices that apply to everyone.
Sources:
The joint EEOC and DOJ Guidance on DEI Compliance (2025)
“Millions of Résumés Never Make It Past the Bots.” Wall Street Journal, June 2025